Australia - The National Broadband Network - Moving into 2017

Publication Overview

The report covers detailed information on the roll out of FttH, FttB, FttN, Fttdp, HFC, Wireless and Satellite infrastructure as well as statistics on subscribers, revenues and a range of other parameters. It also provides a range of analyses and insights as well as an overview of the policies and regulations that apply to the NBN and the effects that this has on competition in the telecommunications wholesale and retail markets.

Executive Summary

NBN making progress but dark clouds ahead

By late 2016 – seven years after the launch of the NBN – over two million premises were able to connect to the NBN. So far three-quarters have access to FttH (fibre to the home), the remainder to wireless and satellite networks. The revised rollout of the so-called MTM (multi-technology mix) based on FttN and HFC) only began in earnest in 2016. The NBN company has now fine-tuned its rollout strategy and is set to extend the network by 40,000 premises a week; but from here on FttH will play only a minor role, mainly in greenfield installations.

After the Coalition government won the 2016 federal election any debate about changes to the underlying infrastructure faded away, as the rollout of the MTM is now too far advanced. However the NBN company has indicated that it does have a roadmap towards providing fibre deeper into the residential network. Fttdp (fibre to the distribution point) is one of the key technologies they are investigating.

Around the same time the industry started to seriously question the regulatory environment around the NBN. The smaller players are in danger of being squeezed out of the market through complex and expensive NBN wholesale offerings. These same arrangements also mean that the end-users are not receiving the benefits of high-speed broadband in an affordable form. The ACCC reacted to this by launching a fresh competition study, the results of which will become available in 2017.

As a result of unattractive wholesale arrangements and a second-rate NBN several telcos are eager to skip the MTM-based infrastructure and deploy their own fibre networks. In this way competition is arriving in multi-dwelling units (MDUs) in various cities, this despite the fact that competition is heavily restricted through government regulations. Advances in wireless technology – especially in comparison with what a second-rate NBN can deliver – has seen an explosion in new players entering this market. Furthermore future developments in mobile technologies (LTE and 5G) will lead to more competition with the NBN, as more and more users will opt for better and more affordable high-speed broadband services through these alternative services.

All of these developments are putting a cloud over the financial future of the NBN company. Government funding runs out in 2017, and with another $20 billion likely to be needed to finish the job it is questionable whether private investors will be interested in funding this shortfall.

Apart from another two-year delay in the roll-out of the NBN – due to the political changes to the NBN since 2013 and a more than doubling of the costs – significant uncertainties still remain about some of the technical and operational issues of the MTM. There are a great number of unknowns in this process and overseas FttN (fibre to the node) experience shows that it is not all plain sailing. In many cases large-scale replacement of old copper infrastructure will be required. At the same time rolling out fibre has become significantly cheaper, especially when done by new companies, as is the case in the USA, France, the Netherlands and a number of other players in Northern and Eastern Europe. Most countries now skip their FttN and HFC rollouts and go straight into FttH.

While in mid-2015 the government revived some of the digital economy strategies that were put in place between 2009 and 2013, there is still no holistic approach to services such as e-health and e-education. Interestingly we see cities developing their own strategies around the concept of smart cities. When the government announced its innovation policy it did not even mention the important role the NBN can play in that context. Cities, however, do understand the importance of such infrastructure for their economic and social developments.

These broader developments in the digital, sharing and interconnected economy will be further accelerated by a range of other industry sectors such as cloud computing, M2M and big data. The over-the-top (OTT) players are also becoming increasingly prominent in the telecoms industry and this will start to blur some of the borders between infrastructure, IT and applications.

The NBN will have to become the predominant national digital infrastructure for all of these developments, as a utilities-based network it will also need to provide its services to those other sectors. With these sectors involved we will see the industry developing specific new business models around infrastructure, ICT and retail. Streaming video and other media and entertainment applications are already playing an important role in the drive for high-speed broadband demand. The question here is whether the current MTM configuration of the NBN will be able to deliver the capacity, reliability, redundancy and security for such services in a ubiquitous way to all Australians. Most experts agree that only a full-fibre network can deliver that level of infrastructure robustness.

The report covers detailed information on the rollout of FttH, FttB, FttN, Fttdp, HFC, wireless and satellite infrastructure, as well as statistics on subscribers, revenues and a range of other parameters. It also provides a range of analyses and insights, plus an overview of the policies and regulations that apply to the NBN and the effect that these have on competition in the telecommunications wholesale and retail markets.

Table of Contents

1. Key developments and analyses

1.1 The NBN in mid-2016

1.2 Can we please have a rethink of the NBN

1.3 NBN – critical for a modern economy and society

1.4 Beyond the good and evil of the NBN

1.5 Telstra - the ongoing winner in the NBN changes

1.6 Climate change – how reliable are our telecoms networks?

1.7 Should taxpayers pay for a NBN based on MTM?

1.8 Has Malcolm Turnbull lost his opportunity for change?

1.9 How to save the NBN

1.10 No mentioning of the NBN in the context of the Digital Economy

1.11 My Republic on the NBN

1.12 NBN critical in developing Australia’s first smart cities

1.13 Broadband services in rural Australia worse than was thought

1.14 Content – the next regulatory war zone

2. Statistical overview, surveys and forecasts

2.1 The NBN wholesale market – ACCC report May 2016

2.2 Market Surveys

2.2.1 Customers aren’t buying fast broadband because that is not what they are being sold

2.2.2 Economic Benefit of the National Broadband Network

2.2.3 NBN support still strong

2.2.4 Towards a Connected Australia - NBN Co Report 2015

2.2.5 Deloitte’s Media Consumer Survey - 2014

2.2.6 Privatisation of NBN is not popular

2.2.7 FTTN modelling results

2.2.8 NBN speeds over 25Mb/s

2.2.9 Broadband benefits for households

2.2.10 Support for fast broadband via an NBN

2.2.11 Customers prepared to pay for higher speeds

2.2.12 NBN key to the creation of 3 million jobs by 2030

2.3 The Digital Economy - Trans-Sector Market

2.3.1 Forecasts – 2015; 2020

2.4 Business Market Survey

2.4.1 NBN Business Readiness Survey

2.4.2 NBN impact on industry output by 2020

2.4.3 Summary of survey findings

2.5 Analyses

2.5.1 The NBN – it should all be about capacity

2.5.2 Australia’s high international broadband costs

3. FttH, FttB developments and roll outs

3.1 Introduction

3.2 Statistical overviews

3.3 FttH in NBN’s FY 2016 Results

3.3.1 FttH statistical overview 2014-2018

3.3.2 Migration of business services

3.4 Fibre-to-the-Basement (FttB)

3.4.1 Multi dwelling units

3.4.2 NBN fibre basements rollout started in late 2014

3.4.3 TPG

3.4.4 Telstra tests FTTB product

3.5 Other developments

3.5.1 NBN Co outlines policies for fibre-on-demand

3.5.2 Cost of a NBN brownfields FTTH connection

3.6 Analyses

3.6.1 FttH business model is gaining strength

3.6.2 Simplification of FttH

3.6.3 FttH cheaper than upgrading the HFC networks

3.6.4 Why Australia needs a Fibre-to-the-Premises policy

3.6.5 Market-led demand for FttH is picking up

3.7 Original rollout

4. FttN and VSDL developments and roll outs

4.1 Statistical overviews

4.1.1 FttN in NBN’s FY Results 2016

4.1.2 FttN vs FttH take-up

4.1.3 Analysis - High-speed broadband take-up is increasing

4.1.4 FttN overview 2014-2018

4.2 Telstra aims at 1 million NBN market share

4.3 G.Fast

4.3.1 Introduction

4.3.2 Analysis - NBN’s ‘not.so.Fast’ G.Fast

4.4 The VDSL Market

4.4.1 VDSL developments

4.4.2 VDSL vectoring

4.5 VDSL infrastructure analysis

4.5.1 FTTN modelling results

4.5.2 The aesthetics of the cabinets

4.5.3 Reliability and performance of the cabinets

4.5.4 Issues in relation to savings coming from sharing infrastructure

4.5.5 The risk of short-circuiting

4.6 Fibre-to-the-Distribution-Point (FTTDP)

4.6.1 Remains on the agenda of NBN

4.6.2 Analysis of FTTdp

4.6.3 NBN company needs support to pursue FTTdp

4.7 Strategic Analysis

4.7.1 Video explosion pushing fixed broadband

4.7.2 Computer transactions, not people, are driving the need for all-fibre networks

4.7.3 NBN – telecoms or digital infrastructure – a SAU question

5. THe HFC Network

5.1 Technology

5.1.1 Hybrid Fibre Coax (HFC)

5.1.2 The DOCSIS standard

5.1.3 The next development for DOCSIS

5.1.4 Can Cable Networks Deliver a Gigabit?

5.1.5 NBN Indicates Upgrade path for HFC

5.1.6 HFC DOCSIS vs. fibre

5.2 NBN - HFC Program

5.2.1 Statistical overview

5.2.2 Overall plan

5.2.3 FttN and FTTB as infills for HFC

5.2.4 Arris appointed supplier of the network

5.2.5 Roll out plan

5.2.6 HFC pilot in Queensland

5.3 Market statistics and estimates

5.4 Telstra

5.4.1 Background information

5.4.2 Network upgrades

5.5 Optus

5.5.1 Overview

5.6 IiNet/TransACT

5.7 BES/e-wire

5.8 hfc NETWORK dARWIN

5.9 Industry analysis

5.9.1 DOCSIS3.0 -v- DOCSIS 3.1

5.9.2 Do we need infrastructure-based competition?

5.9.3 Moving on from the HFC of the past

5.9.4 HFC incorporated in multi-technology NBN

5.9.5 From HFC to Fibre-to-the-Home (FttH)

5.9.6 Open access policy

5.9.7 Superfast Broadband Access Service (SBAS)

6. Fixed Wireless and Satellite Networks

6.1 Introduction

6.2 Statistical overview

6.2.1 Roll out statistics mid 2016

6.2.2 Statistical overview 2014-2018

6.3 NBN Co’s Fixed Wireless Network

6.3.1 Services based on 2.3GHz spectrum

6.3.2 Construction plan

6.3.3 Visionstream to construct the network

6.3.4 Hills to do the home installations

6.3.5 Colocation and tower sharing

6.3.6 NBN facilitates wireless competition - Analysis

6.3.7 Fixed wireless rollouts

6.3.8 Other developments

6.4 The NBN Satellite Network

6.4.1 Launch of the satellites

6.4.2 The name of the service: Sky Muster

6.4.3 Ka-band satellites

6.4.4 Faster speeds with restrictions

6.4.5 doubling of data allowances with 2nd satellite

6.4.6 SkyMesh first with satellite retail pricing

6.4.7 Education and community applications

6.4.8 Interim satellite services (ISS)

6.4.9 Contracts

6.4.10 Analysis - Satellite and wireless uptake greater than expected

6.5 Why Wireless Broadband is no alternative to FttH - Analysis

6.5.1 Problems in metro fringe areas

6.6 NBN Fixed Wireless Broadband: A Global Comparison

7. Wholesale and competitive access

7.1 Introduction

7.2 Analysis of the wholesale market

7.3 Wholesale reforms

7.3.1 Introduction of regulatory instruments

7.3.2 Regulatory instruments – analysis

7.3.3 Final access determinations for fixed line telecommunications

7.3.4 Layer 2 bitstream on non-NBN Co networks

7.3.5 Difference between peering and interconnection

7.3.6 The thriving wholesale aggregation market

7.4 Analyses

7.4.1 Flawed NBN structure undermines competition

7.4.2 Telstra dominance set to remain

7.4.3 NBN retail competition at lower margins

7.4.4 Government is forcing the telco industry to fight Telstra dominance

7.4.5 Government regulations should not stop Australia from getting better broadband

7.4.6 Open up the metropolitan NBN market to competition

7.4.7 Competition in the telecoms industry is dwindling

7.5 Case study - TPG highlights the fragile NBN environment

7.5.1 TPG exposes weaknesses in NBN retail models

7.5.2 Market-led vs. Government intervention

7.5.3 You cannot unravel the NBN

7.5.4 The fragility of the wholesale-only model

7.5.5 NBN is a finely balanced exercise

7.6 Wholesale Product Overview

7.6.1 NBN for business

7.6.2 1Gbps wholesale service

7.6.3 The FttN service

7.6.4 Access seekers gateways

7.7 NBN Co’s multicast service

7.7.1 Overview of the service

7.7.2 Wholesale Pricing

7.7.3 The effect of streaming video on the NBN

7.7.4 iiNet

7.7.5 4K TV

7.8 Pricing Strategies

7.8.1 Wholesale Broadband Agreement

7.8.2 NBN Co special access undertaking (SAU)

7.8.3 Wholesale prices

7.9 NBN Utility Management service – The Retail Clause

7.10 The NBN CVC and PoI debate

7.10.1 Wholesale dominance

7.10.2 Backhaul competition

7.10.3 The business opportunities of the POIs

7.10.4 Connectivity Virtual Circuit (CVC)

8. Policies and regulations

8.1 ACCC competition study

8.2 2015 Regional Telecommunications Review Report

8.3 Telstra – NBN Co deal 2.0

8.3.1 NBN – this is as good as it gets (Analysis)

8.4 Infrastructure competition or Infrastructure utility

8.4.1 Do we need infrastructure-based competition?

8.4.2 Forty years too late

8.4.3 Who is going to invest in competing fixed infrastructure?

8.4.4 So what are the competition models from those promoting it?

8.4.5 Competition policy should be focused on the services, not the infrastructure